Dialogue with protesters can resume once the by log violence ends. Pacific shares tumble as a cancel slides. Afterr embattled leader argentinas assets plunged president Mauricio Macri warns against return to a previous regime. We havereatest problem today is that the alternative to the government, the kershner alternative does not have international credibility. Ive been saying this for three nap years. International investors do not trust them. Good morning. Lets take a look at the assets across the world. After the news out of argentina and china. Asianpacific stocks look down more than 1 . After the retreats in europe yesterday in the u. S. After that, in response to hong kong we see the asiapacific index down. Chinas 10 year yield reaching a low of almost 3 . Right now 3. 01 . It had been down that low. You can seals even in china where growth and inflation are yields in china where growth and inflation are higher is down to 3 . Then the sei em currency index falling at concerns about argentina rebel throughout markets. Ripple through markets. U. S. Session yesterday the low bond yields did not supervise support to equities. We saw that yields cash the 30 year yield cyber record low. And that 10 year yield dropped. The 10 year yield steady after dropping a must attend basis points. Everything a little recovery in s p futures up. 2 . Overall a bid for safe haven assets and a selloff in risk assets. That is turning run ever so slightly today. The risks continue with hong kongs embattled executive carrie lam saying the citys economy is suffering as a result of the ongoing protests and warns it could take a long time to recover. Hired everyone here to put on their prejudices, try to calm down emotionally. I urge everyone here to put down prejudices. Look closely at our city. Hong kong, our home. We want to see hong kong fall into an abyss. Meanwhile hong kong airport says operations are back to normal when hong kong flights were canceled yesterday amid a satan i of protesters. Amid a sit in yesterday by protesters. Are we seeing any signs that civilization might be coming soon . Operationally, the hong kong airport says things are getting back to normal. Keep in mind you had hundreds of flights affected including cancellations. Even Cathay Pacific is saying is going to take another couple of days, tomorrow and thursday to get all of the passengers redirected and to their destinations. So it is not necessarily back to normal for the airlines. By the airport is operating. At regular capacity right now. Just trying to get all of those planes slotted and flown out of here. Passengers have been arriving. It has been a steady buzz and drum up of more people. Behind me, let me step away for second. Is not like yesterday where we had an estimated maybe in the high side but about 10,000 or so protesters which led, of course, to the sudden decision by the hong kong airport and the Hong Kong Government to shut down all flights outbound and many of them inbound yesterday afternoon. And it remained pretty much shut throughout the night as protesters also stayed here. They did start leaving of their own volition yesterday evening and into the early hours of the morning as rumors spread that right place perhaps would come in. However that did not happen so far, ive been here since five this morning. So far we have not seen any Police Presence other than airport security. One thing we have learned in the last hour though, and the last five minutes the airport express train which yesterday got clogged to standing room capacity only, theyre going to reduce the frequency from every 10 minutes to every 15 minutes. We talked to a spokesperson for the airport and they said that is pretty much for crowd control. They do not necessarily want a repeat of yesterday, even though protesters are calling for more protesters. Once youve got your rest back home, come back to the airport today. Carrier lamb earlier in a rowdy news carrie lam earlier in a rowdy News Conference. Is there anything she can do to calm this unrest . Now she is not said anything new, other than that the economy continues to weaken further. She is not given in on any of the five main demands from the protesters. Firm that it is not the time to resign. She has to see this through. As i said, not a lot new from her today other than again, warning that the hong kong economy could fall into the abyss. Mo, ao heard from claudia pan democrats lawmaker she is giving more support to the protesters. She said it is clear from the press Conference Today who her bosses and that is beijing. Carrie lam has basically confirmed to the press who is actually running the show in hong kong, and that is beijing. Carrie lam though, did show more emotion then she has in the last couple of weeks since resurfacing before the cameras prayed she said she is heartbroken that there were protesters injured on the streets of hong kong over the weekend, including of course the one who has become as ability protests including here yesterday at the airport become a symbol of the protests including yesterday at the airport. Hit by a Police Project on the eye. Stephen thanks very much. Stephen engle at the hong kong airport. Now risk off momentum is gathering pace, the yield on the u. S. Long bond has grossed an alltime low has brochin long time alltime low. Events in hong kong and argentina over the past 24 hours have added to the negative sentiment. The yield on the 10year note depth as well. At one point it was just five basis points more than the twoyear. That is the flattest that the sinceends curve has been 27th 2007. Ubs has dropped its forecast for the 10 year treasury yield from 2 . This chinas tenure sovereign bond yield fells for the First Time Since 2016. Chinas many data has not helped sentiment. Growth back to the slowest on record. Lets look at the drop in long bond yields in the u. S. First. Had goldman this week turning neutral on global bond duration after the recent rally. Would you bes making this a movie . If you look at what is going on globally, growth is slow and slowing. Inflation is nonexistent, the momentum in the economy is downwards. After that some jeep that some geoPolitical Risk and theres only one way to go for a bond yields and that is down. Spread, do youhe see it actually inverting and what is that mean to you . At the moment we still see that the u. S. Yield curve is still basically flat. That means that the market is not really pricing in a recession just yet. So u. S. Yields are low, but compared to global the global yield, u. S. Yields still look reasonably attractive from a global perspective they still offer some yield at least. Which part of the curve looks most attractive to you. If you say yields have only one way to go do you prefer the longer and . For our clients we are pretty neutral on duration. It is pretty difficult to invest with bond yields in your about the negative and the u. S. At 2 . We are pretty neutral but the direction is pretty clear at the moment. If you want to take some duration risk, if you want to take some leverage, at least you want to go out to the longer and the curve. What are you recommending to your clients . Is this a time where you would rather focus on preserving capital than chasing returns . We got into that Inflection Point . Arees for our client we basic claim making that call. Here markets are still up 10 for the air. It is fine to look and lock in some gains given the glow outlook. Bonds are not really attractive. Basically as preservation of capital at this juncture. Talk to me about risk assets you mentioned equities. The s ps top 500 stuck between the 50 day and 200 and moving averages. If we break the 200 Day Moving Average to the downside, would you be expecting losses at the magnitude of the december route that would keep you away from equities . Or is still summit positives on risk at what assets. Equities or maybe on credit . For our clients we like credit a bit more than equities. On the equity side we do not see the growth of their. For the credit side, it is really difficult for a company to default, given the low Interest Rates. Global growth is weak but not that week. So we kind of prefer credit over equities. Small on the way equities. Leaning toward a more negative sense stance. The timing is not there. That technicals could be one of them. Or in theory the fundamentals which we are not seeing at the moment. Are there any regions that you prefer . Prolonged time we have seen europe undervalued in relation to the u. S. In terms of equities. Asia is one that a lot of people have been talking about as well as being undervalued. Perspective,uation the case is clearly for europe []for but for little Global Growth outlook you want to prefer the u. S. That is usually the region that outperforms if things get into a special situation. You said you might be looking to increase the underweight in equities. You said one thing that might trigger that would be the technicals. If you and yields drop further with that make you want to take any off the table from equities. But with interest in yesterdays low bond yields did not support the equity market. So far one thing that kept us from increasing the underweight is that the bond yields are support. Markets love low rates. We are enthusiastic about that. At a certain point there is a negative cycle feeding in. And the bond market is telling us something that dings are not that sound. That negative sentiment really changes that lower yields lead to lower equity markets, that could be a clear catalyst. , roelofs elements are guest cohost. Lets get the bluebird first word news. Bloomberg first word news. Italian Prime Minister will have to wait before consolidating power in rome. Senate leaders have not agreed on a date for conference vote. Decisions in the Upper Chamber will continue tonight. If there is a new election, salvi needs commanding lead in the poll means he will likely be the next Prime Minister. Vice president lenny in 2022. On a run she said she would not have run for the vice presidency if she did not feel ready for the top job. She does not want the u. S. To take sides in the u. S. China trade war. To be more friendly with china or with asian neighbors would mean decrease our friendship or our relations with the united states. And i do not believe in that. I do not believe that the philippines should choose between the u. S. And china. Robredo. Hasapore the city state seen growth at zero to 1 this year. The outlook has darkened in recent months. The trade war has raised the prospect of a recession and job losses. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Coming up, another embattled leader after argentinas assets plunge, president Mauricio Macri warns against a return to the previous return previous regime. Toand when youre traveling work, tune into Bloomberg Radio live on your mobile device or on dab on Digital Radio in the london area. This is bloomberg. Good morning this is bloomberg daybreak europe. In on the markets in asia. Risk off once again we are taking our lead from what we saw an global stocks overnight. We had a number of markets in asia resuming trade today after a Public Holiday yesterday. Quite some accelerated losses in the likes of the nikkei down by 1. 2 . We also have a weaker yen today. And the philippines is at an 11 week low in its index as it resumes trade. The hong kong hang seng index continuing to be sold off protests generating seven sentiment. Cathay pacific shares falling sharply for a second session. Reprieve coming through in these markets today. We have been seeing a lot of money going into bonds in asia as well you were mentioning the yield on chinas tenure falling to 3 for the First Time Since 2016. I also want to show you what is happening hinge singapore. We had a negative read in Second Quarter gdp. Actually falling i 3. 3 , which was below estimates. When we had seen 3. 8 rose in the prior quarter. If we see another quarter of growth that is going to be a technical recession for the singapore at the same time the government coming through and cutting their 2019 growth forecast to zero to 1 from one and half to 2 . All of this in the wake of the u. S. China trade dispute. Bluebird economics saying stagnation in singapores economy in the Second Quarter could set the stage for a recession in the second half. Juliette, thank you very much. Lets get to south america the secondbiggest market selloff regions50 across all happened yesterday. After president macri had a landslide lost in weekend primaries to his populist opponents Alberto Fernandes, the markets followed suit. The peso tumbled 33 to a record low six ypres dollar. And the marybelle stock index lost the most in intraday trading. In a press conference the president blamed the market rout on his populist opponent. The greatest problem we argentina ands have today is the alternative to the government, the kershner alternative, does not have International Credit ability. I have been saying this for three years. International investors do not trust them. Jonas now are managing editor for global markets. Just in, why are investors so scared of the Previous Administration since it should be mentioned that Christina Fernandes to cash in her would be the Vice President will Alberto Fernandes returning to power . I guess theyre worried theyre not going to get their money back on their bonds, that is underlying this whole issue prevents why we are seeing people selling argentina so strongly. We are seeing the peso plunge. The problem here is that macri for the past four years has been trying to establish a credibility as we heard in that clip just now. That is pretty much the story. That is why International Investors have trusted Mauricio Macri. He has on his level best to try to put the country back on a stable footing. He has won a record imf bailout to try and help, as i said steer the country back on some kind of realistic economic model. The alternative is that we go back to the populist policies that you talked about, the the fernandez camp represents. That doesnt speak to what the ordinary argentinians are feeling. They are feeling the doubledigit unemployment 50 inflation you have this kind of dichotomy divide between how the International Community looks at argentina, and how ordinary argentines see the country. That is why we see this big sharp election results, and the concert and markets at the moment. Cana but the thing is Alberto Fernandez actually achieve the same goals with different policies while maintaining the support of the imf . The imf is key here. Really important now is to see how fernandez negotiates these next couple of months. Is he going to make all the right noises that say yes, we will talk to the imf . We will try to continue some of the policies that macri has brought in . Or is he going to say no, we will go back to the old plan. And that is really what people want to see. The initial signs are not entirely positive. Because he has already started to blame macri for the state of the country. And macri has said look what markets are doing right now. That is all a reflection of what people think you represent. So it is very much the blame game going on at the moment. Said hes has already does not want to default on the bonds. Yes, who would . But the market is seeing it very definitely now. About 75 s talking probability of a default over the next five years. According to credit default swap. Matt one of the things i was talking about with colic this morning is how likely is it that Market Pricing changes the outcome of an election . We have seen these kind of things before. For example in turkey, when the leader dropped out of control, or rose in relation to the dollar. When the lira dropped out of control arose in relation to the dollar. It did not seem like that affected erdogan in his situation. Can we expect voters minds not to change and argentina either . You brought a very good point. Of course we see all these numbers and they look very ugly. But again, people on the ground are not as aware of what goes on in the stock exchange. They are not looking upon prices pretty theyre looking at how to get to the next few days. Is inflation. On ifs big selloff in the peso it is sustained this way, and it looks as if it might be for some no one sees time the peso coming back from this. Then that will have an inflationary knock on effect. But that will not show up for a while yet. And certainly not before the election. And argentines are already grappling with 50 inflation. So what is a little bit of extra inflation on top of that really going to do . Is it going to make much of a difference . I doubt it. Also quite used to a volatile and week currency. Let me ask whether the market in your mind has fully priced in all the dangers that justin point is to have a fernandes when, or if we could see even more extreme moves from here . It is difficult to say in this environment because the outcome is pretty binary. That is the worrying part. The mess from the market is pretty clear. Argentina defaulted eight times over the last hundred years. I think the probability clearly from the bond markets and currency markets is that they will default again if the populist regime comes into power. I do not think it will change the voters minds. Because they are really feeling the pain on the street. But the market is pretty clear. Argentina depends on the kindness of strangers. And the strangers happen to be foreign investors. Thank you so much. Go format. Go for it, matt. Depthwe have seen the dropped so much. . 55 on the dollar is where we see argentine century bonds trade trade i just wanted to point that out. Talking about this hundred year debt. It is certainly not worth as much as it once was. Nejra absolutely n